Democrats’ Next Tango in Paris

Democrats Look to French Socialists for Inspiration So They Can Feed Their Addiction to Spending, Borrowing and Debt 

• Blinded by their spending addiction, Washington Democrats have been citing election victories by socialists in France and Greece as inspiration for more of the same failed spending and borrowing policies from the last three years.
• Extensive economic evidence shows that the Democrats’ agenda of more spending, more borrowing and more debt will result in lower economic growth, which could lead to fewer economic opportunities for working families.
• Democrats are so addicted to spending that they are grasping for any excuse they can find to feed their addiction, but Europe’s decades of sky-high unemployment are a case study in the failure of the Democrats’ agenda of spending without limit.

Blinded by their spending addiction, Washington Democrats have been citing election victories by socialists in France and Greece as inspiration for more of the same failed spending and borrowing policies from the last three years:

FRANCE ELECTED FIRST SOCIALIST SINCE 1981, GREECE EXPERIENCING TUMULT AGAINST BUDGET CUTTING: (James G. Neuger, “EU Uses Hollande’s Victory, Greek Tumult to Preach Growth,” Bloomberg, 5/8/2012)

“DEMOCRATS SEE CONFIRMATION” OF THEIR SPENDING SPREES IN ELECTION RESULTS FROM GREECE AND FRANCE: “Democrats see confirmation of their budget policies in the results of this weekend’s elections in Greece and France, where voters turned out politicians who were tied to austerity measures, says Rep. Chris Van Hollen, the top Democrat on the House Budget Committee.” (Dave Cook, “Austerity Votes in Europe Show that GOP is Wrong, Top Democrat Says,” The Christian Science Monitor, 5/8/2012)

RANKING DEMOCRAT ON BUDGET CHRIS VAN HOLLEN CLAIMS CUTTING SPENDING “HAS ONLY MADE [EUROPE’S] ECONOMIC DOWNTURNS WORSE, NOT BETTER”: “Republicans have backed a plan to cut and grow, Van Hollen said. ‘What has been very clear about the situation in the UK and other places is that that approach has only made their economic downturns worse, not better.’” (Dave Cook, “Austerity Votes in Europe Show that GOP is Wrong, Top Democrat Says,” The Christian Science Monitor, 5/8/2012)

REP. GERRY CONNOLLY (D-VA) CELEBRATES SOCIALIST VICTORIES IN EUROPE TO DEFEND CALLS FOR MORE STIMULUS SPENDING:“Democrats were quick to tout the elections as vindication for their own pro-growth spending ideas. The success of Hollande’s platform mirrors U.S. polling that suggests domestic fatigue with budget-slashing and support for higher taxes on the wealthy, a hallmark of Obama’s ‘shared sacrifice’ campaign message. … ‘We’ve seen something like seven European governments topple over the issue, really, of austerity measures to rein in debt and to try to get our fiscal house in order,’ Rep. Gerry Connolly (D-Va.) said in an interview. ‘That approach obviously is not a winning approach in the electorate.’” (Ben White, Politico’s “Morning Money,” 5/8/2012)

Extensive economic evidence shows that the Democrats’ agenda of more spending, more borrowing and more debt will result in lower economic growth, which could lead to fewer economic opportunities for working families: 

CURRENT U.S. DEBT LEVEL AT 101% OF THE SIZE OF THE ECONOMY: NATIONAL DEBT STANDS AT $15.67 TRILLION, LARGER THAN THE NATION’S $15.46 TRILLION ECONOMY: (“The Daily History of the Debt Results,”TreasuryDirect.Gov, Accessed 5/7/2012; “National Economic Accounts,” Bureau of Economic Analysis, Accessed 5/7/2012)

EXTENSIVE ECONOMIC RESEARCH SHOWS LINK BETWEEN HIGH DEBT AND LOWER ECONOMIC GROWTH:

MAJOR STUDY: U.S. COULD FACE “MASSIVE” LOSSES IN ECONOMIC GROWTH DUE TO DEBT: (Rich Miller, “Reinharts, Rogoff See Huge Output Losses From High Debt,” Bloomberg Businessweek, 4/30/2012)

DEBT LEVELS MORE THAN 90 PERCENT OF ECONOMY COULD REDUCE ECONOMIC GROWTH BY 25%: “In a paper published today on the National Bureau of Economic Research’s website, they found that countries with debts exceeding 90 percent of the economy historically have experienced subpar economic growth for more than 20 years. That has left output at the end of the period a quarter below where it would have been otherwise.” (Rich Miller, “Reinharts, Rogoff See Huge Output Losses From High Debt,”Bloomberg Businessweek, 4/30/2012)

CBO: OBAMA BUDGET WILL “HURT THE ECONOMY IN THE LONG TERM”:“The nonpartisan Congressional Budget Office said Friday that President Obama’s 2013 budget will hurt the economy in the long term, arguing the larger deficits it would produce would reduce the amount of capital available to businesses.” (Erik Wasson, “CBO Estimates Obama 2013 Budget Will Hit Economic Growth,” The Hill, 4/20/2012)

MORE CBO: OBAMA PROPOSALS “WOULD REDUCE ECONOMIC OUTPUT BY BETWEEN 0.5 PERCENT AND 2.2 PERCENT”: “After five years, the CBO says, the Obama proposals would reduce economic output by between 0.5 percent and 2.2 percent.” (Erik Wasson, “CBO Estimates Obama 2013 Budget Will Hit Economic Growth,” The Hill, 4/20/2012)

“ECONOMIC DAMAGE BEGINS TO RISE” WHEN PUBLIC DEBT HITS 90% OF GDP: “Economists believe that when debt to GDP reaches 90% or so, the economic damage begins to rise. And this doesn’t include the debt that future taxpayers owe current and future retirees through the IOUs in the Social Security ‘trust fund.’” (Editorial, “The Amazing Obama Budget,” The Wall Street Journal, 2/14/2012)

STUDY SHOWS DEFICTS PUT A DRAG ON OUR ECONOMY: “The eventual effect of sustained fiscal imbalance is slower growth and greater risk of a fiscal crisis.  Our estimates suggest that a 10-point increase in the debt/GDP ratio lowers growth four years later by 0.2 percentage point, and increases the probability of a debt crisis by 2.5% in the aftermath of a financial crisis like the recent one.  (See No Rush for the Exit,” Global Economics Paper, No. 200, June 30, 2010 and “When One Crisis Leads to Another,” US Economics Analyst, 11/04, Jan. 28, 2011.)  To avoid this, lawmakers must begin to identify deficit reduction strategies.

“Ultimately, what goes up must come down. In the case of the federal budget, this means that a deficit-financed boost to growth will eventually lead to a drag. While policymakers can try to smooth the transition by phasing in cuts and incorporating multi-year fiscal commitments, achieving a sustainable fiscal policy will inevitably be a painful but necessary process.” (Jan Hatzius and Alec Phillips, “Fiscal Restraint: A Question of When, Not If,”Goldman Sachs Global ECS U.S. Research, 3/2/2011)

PREVIOUS ECONOMIC STUDY LINKED GOVERNMENT DEBT TO SLOWER ECONOMIC GROWTH: “The sharp run-up in public sector debt will likely prove one of the most enduring legacies of the 2007-2009 financial crises in the United States and elsewhere… Our main finding is that across both advanced countries and emerging markets, high debt/GDP levels (90 percent and above) are associated with notably lower growth outcomes… Seldom do countries simply ‘grow’ their way out of deep debt.” (Carmen M. Reinhart and Kenneth S. Rogoff, “Growth in a Time of Debt,” American Economic Review Papers and Proceedings, 12/31/2009)

Democrats are so addicted to spending that they are grasping for any excuse they can find to feed their addiction, but Europe’s decades of sky-high unemployment are a case study in the failure of the Democrats’ agenda of spending without limit:

10.9% UNEMPLOYMENT RATE IN EUROPE AREA: (“Harmonised Unemployment Rate By Sex,” Eurostat, Accessed 5/8/2012) 

10.0% UNEMPLOYMENT RATE IN FRANCE: (“Harmonised Unemployment Rate By Sex,” Eurostat, Accessed 5/8/2012)  

21.7% UNEMPLOYMENT RATE IN GREECE: (“Harmonised Unemployment Rate By Sex,” Eurostat, Accessed 5/8/2012)  

U.S. UNEMPLOYMENT RATE AT 8.1% AS “EMPLOYERS PULLED BACK ON HIRING,” “A SOBERING REMINDER THAT THE ECONOMY REMAINS WEAK”: (Christopher Rugaber, “Unemployment Rate Falls to 8.1 Percent as U.S. Adds 115,000 Jobs in April,” Associated Press, 5/4/2012)

DEMS’ STIMULUS PROMISE: UNEMPLOYMENT SHOULD BE BELOW 6% BY NOW: (Jim Pethokoukis, “The Awful April Jobs Report: Is the ‘Real’ Unemployment Rate 11.1%?”, The American, 5/4/2012)

TOTAL DEBT INCREASE UNDER OBAMA NOW AT $5.04 TRILLION: (“The Daily History of the Debt Results,” Treasury Direct, Accessed 5/7/2012) 

“NATIONAL DEBT HAS INCREASED MORE UNDER OBAMA THAN UNDER BUSH”: (Mark Knoller, “National Debt Has Increased More Under Obama than Under Bush,” CBS News, 3/19/2012)

THREE YEARS AND TWO MONTHS OF OBAMA IS MORE DEBT THAN EIGHT YEARS OF PREDECESSOR: (Mark Knoller, “National Debt Has Increased More Under Obama than Under Bush,” CBS News, 3/19/2012)

POLITIFACT SAID LAST YEAR THAT OBAMA WAS THE “UNDISPUTED DEBT KING OF THE LAST FIVE PRESIDENTS”: “Obama is the undisputed debt king of the last five presidents, rather than the guy who added a piddling mount to the debt.” (Louis Jacobson, “Nancy Pelosi Posts Questionable Chart on Debt Accumulation by Barack Obama, Predecessors,” Politifact, 5/19/2011) 

OBAMA RECORD “THE MOST RAPID INCREASE IN THE DEBT UNDER ANY U.S. PRESIDENT”: (Mark Knoller, “National debt has increased $4 trillion under Obama,” CBS News’ Political Hotsheet Blog, 8/22/2011)

YET DEMOCRATS CONTINUE TO SPEND MORE MONEY THAT WE DON’T HAVE:

“CBO: EXPLODING DEBT UNDER OBAMA POLICIES”: (David Rogers, “CBO: Exploding Debt Under Obama Policies,” Politico, 3/16/2012)  

“OBAMA’S TAX AND SPENDING POLICIES WILL YIELD $6.4 TRILLION OVER THE NEXT DECADE”: “The Congressional Budget Office said Friday that President Barack Obama’s tax and spending policies will yield $6.4 trillion in deficits over the next decade, more than double the shortfall in CBO’s own fiscal baseline — even after taking credit for reduced war costs.” (David Rogers, “CBO: Exploding Debt Under Obama Policies,” Politico, 3/16/2012) 

“EVEN IF OBAMA WERE TO GET HIS WAY ON ALL FRONTS,” DEBT WOULD “NEARLY DOUBLE AGAIN” TO $18.8 TRILLION IN 2022: “That said, the picture is grim, and even if Obama were to get his way on all fronts, the federal debt held by the public would nearly double again from $10.1 trillion at the end of 2011 to $18.8 trillion at the end of 2022.” (David Rogers, “CBO: Exploding Debt Under Obama Policies,” Politico, 3/16/2012) 

OBAMA’S BUDGET ENSURES DEBT “WILL CONTINUE TO RISE AS FAR AS THE EYE CAN SEE”: (Mark Knoller, “National Debt Has Increased More Under Obama than Under Bush,” CBS News, 3/19/2012)

REUTERS: “OBAMA UNVEILS BIG SPENDING ELECTION-YEAR BUDGET”:(Alister Bull and Laura MacInnis, “Obama Unveils Big Spending Election-Year Budget,”Reuters, 2/13/2012)

NEW BUDGET “LADEN WITH STIMULUS-STYLE INITIATIVES”: “The president’s plan is laden with stimulus-style initiatives: sharp increases for highway construction and school modernization, and a new tax credit for businesses that add jobs.” (Andrew Taylor, “Obama Budget: New Spending with Recycled Tax Ideas,” Associated Press, 2/11/2012)